Amid expectations for potentially lasting demand impacts from former Hurricane Ida, natural gas futures fell in early trading Tuesday. The October Nymex contract was off 6.8 cents to $4.237/MMBtu at around 8:55 a.m. ET.
As of early Tuesday Ida was moving over northern Mississippi as a tropical depression, carrying maximum sustained winds of 30 mph, according to the National Hurricane Center (NHC).
“The depression is moving toward the northeast near 12 mph, and Ida is expected to continue gradually accelerating to the northeast over the next couple days,” the NHC said. “…Little change in strength is forecast during the next 48 hours.”
While the storm itself has weakened, Ida’s impacts on the natural gas market will linger for days or weeks to come, Wood Mackenzie analyst Dan Spangler said.
“Nearly all Gulf of Mexico production is shut in, with a decline of 2.1 Bcf/d,” the analyst wrote in a note to clients early Tuesday. “Most offshore pipelines haven’t commented on the status of their systems or a return to service,” though a couple have indicated readiness to begin accepting volumes again.
During last year’s hurricane season, when offshore platforms were evacuated due to storms production “generally started to come back after just a few days and was generally back to normal levels after around two weeks,” Spangler added. “If Ida caused any significant damage to offshore systems that timeline could, of course, be extended.”
The demand impacts, however, figure to last longer, according to the analyst.
Entergy Corp. reported around 895,000 customers without power Monday in the storm’s wake. Entergy New Orleans CEO Deanna Rodriguez said restoration efforts “will be a marathon, not a sprint” as the utility expected to have a team of more than 20,000 working to get power back online.
Energy Information Administration data on the Midcontinent Independent System Operator (aka MISO) territory showed natural gas-fired generation dropping “significantly more than other fuel sources,” according to Spangler.
“Nuclear generation is also down with Entergy’s Waterford 3 plant offline after losing offsite power, and the River Bend Station nuclear plant is operating at 40% capacity at the direction of the system dispatcher,” the analyst said.
That Ida appears to have spared liquefied natural gas export facilities in Louisiana may have fed initial buying interest in the market after the weekend break, according to NatGasWeather.
“To the bearish side has been widespread power outages across the South from Ida and cooler trends in the weekend weather data,” the firm added. “…How long it takes for production and power to be restored will be closely watched by the natural gas markets.”
Major weather models overnight dropped a small amount of demand from the outlook for next week. The data “held a seasonal to slightly bearish pattern much of the next 15 days for larger weekly builds as widespread summer heat fades,” NatGasWeather said.
October crude oil futures were down 71 cents to $68.50/bbl at around 8:55 a.m. ET.
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August 31, 2021 at 08:10PM
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Ida's Demand Impacts Overshadowing Production Shut-Ins as Natural Gas Futures Slide - Natural Gas Intelligence
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